If I were an entity such as the Federal Reserve or US Fedgov I would be extremely threatened by Bitcoin.

This is the point where your reasoning goes wrong.

The government isn't threatened by bitcoin. Why would it be? Right now it is just a nerdy internet cryptocurrency accepted by almost nobody (with the exception of sellers of black/grey market goods and services and hardcore proponents). It's main userbase scams each other on an alarming scale, and the network (mining) consists of a neverending arms race that ensures that eventually only the top x% can run it.

If I were an entity such as the Federal Reserve or US Fedgov I would be extremely threatened by Bitcoin.

This is the point where your reasoning goes wrong.

The government isn't threatened by bitcoin. Why would it be? Right now it is just a nerdy internet cryptocurrency accepted by almost nobody (with the exception of sellers of black/grey market goods and services and hardcore proponents). It's main userbase scams each other on an alarming scale, and the network (mining) consists of a neverending arms race that ensures that eventually only the top x% can run it.

I agree that this is how government as a whole probably perceives it.There may be a few individuals in law enforcement or even politicians who see the potential of grass-roots programmable money - but I doubt it will truly be on governments radars as a genuine threat which is worth assigning serious resources, until large scale usage in particular areas of governmental concern actually occurs.They'll react once the volume of trade related to things like silk-road drugs, money laundering or bypassing of gambling laws is approaching billions of USD worth.

Aside from large scale operations grabbing their attention - the other thing that could prompt action would be a highly public successful extortion or kidnap ransom type of event. (The Romney tax thing came close - but it'd have to actually be something that followed through and had serious consequences financially, politically or lethally) That sort of event aside - it would really surprise me to see them react pre-emptively against bitcoin whilst the entire Bitcoin economy is only on the order of a few hundred million USD.I could be wrong - but I see politicians and government bodies as far more reactionary than visionary, and no public servant or politician is going to gain much advantage tackling something that their peers don't understand and that the public doesn't particularly care about. Once the horse has bolted - then they'll stir into action.

edit: The other potential trigger for governmental action could be lobbyists from particular industries (e.g payments/banking) who do understand the threat - but there again, it seems a stretch to think they'll react or be able to successfully get action unless the numbers show an existing phenomenon that is eating into profits.

If I were an entity such as the Federal Reserve or US Fedgov I would be extremely threatened by Bitcoin.

This is the point where your reasoning goes wrong.

The government isn't threatened by bitcoin. Why would it be? Right now it is just a nerdy internet cryptocurrency accepted by almost nobody (with the exception of sellers of black/grey market goods and services and hardcore proponents). It's main userbase scams each other on an alarming scale, and the network (mining) consists of a neverending arms race that ensures that eventually only the top x% can run it.

I agree that this is how government as a whole probably perceives it.There may be a few individuals in law enforcement or even politicians who see the potential of grass-roots programmable money - but I doubt it will truly be on governments radars as a genuine threat which is worth assigning serious resources, until large scale usage in particular areas of governmental concern actually occurs.They'll react once the volume of trade related to things like silk-road drugs, money laundering or bypassing of gambling laws is approaching billions of USD worth.

Aside from large scale operations grabbing their attention - the other thing that could prompt action would be a highly public successful extortion or kidnap ransom type of event. (The Romney tax thing came close - but it'd have to actually be something that followed through and had serious consequences financially, politically or lethally) That sort of event aside - it would really surprise me to see them react pre-emptively against bitcoin whilst the entire Bitcoin economy is only on the order of a few hundred million USD.I could be wrong - but I see politicians and government bodies as far more reactionary than visionary, and no public servant or politician is going to gain much advantage tackling something that their peers don't understand and that the public doesn't particularly care about. Once the horse has bolted - then they'll stir into action.

I agree with this and think that the individual opinion of gov worker vs what gov will 'think' and do is huge. Virtually no government worker who thinks bitcoin is going to deal major damage to government is going to go spouting their ideas and lose their job or be ridiculed, they are going to collect bitcoins.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.

its not a government threat, much like travellers cheques are not a threat to the Mint

the Romney tax scandal was doomed to be a non starter. asking for $1mil in bitcoins.. bitinstant wont even accept more then $10,000 a year let alone allow a $1mill one off payment.

and how else was romney going to get his hands on $1mill of bitcoins in the time period given?

if you want a conspiracy theory.. then here is one. the bitcoin dollar market cap.. you actually think that there is $150mill of fiat floating around in mtgox/bitinstants/bitpay bank accounts to guarantee the value?

imagine if there was only $1mill and everyone receiving a prepaid debit card cashed out in one go...

imagine the consequence

I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER.Please do your own research & respect what is written here as both opinion & information gleaned from experience. many people replying with insults but no on-topic content substance, automatically are 'facepalmed' and yawned at

If I were an entity such as the Federal Reserve or US Fedgov I would be extremely threatened by Bitcoin.

This is the point where your reasoning goes wrong.

Well, another point is, if you have enough to buy a lot of ASIC systems at retail price, that means you have enough money to produce them. It's not immensely expensive really, we did it as pseudonymous strangers registered on a forum with ASICMINER. Also, this way you could do it covertly, which would considerably increase the attack's effectiveness.

However that's not how State works at all. If it did, we didn't have hidden services, or even the Internet as it is. A lot of revolutionary things happened in recent centuries which could at the time may have been perceived as a threat to the State but then turned out to be as efficient to empower it. Bitcoin might very well be one of those things, or it might not be. Neither us nor the State knows how things will turn out. Furthermore, the State isn't a conspiracy of individuals, it has a mind of its own, and no one knows what it is thinking until it acts.

BitCoin was started as a CIA experiment to get Al-Cadia and other drugs merchants trapped, in there hidden code it tracks everybody via IP and Telco-GEO-Locational navigation systems. These techs hook into all forms of social media and transfer there intelligence via the hidden 1024 block header byte part of and smtp email IP packet

We are all just pawns in their evil experiment

"THE BIG CASH OUT" as I like to call it is when the CIA will call in all the coins. WHy do u think they have a system that displays all transactions

Its Like OMG people ...So the idea the government shutting it down when it was started by the government !!!!

BitCoin was started as a CIA experiment to get Al-Cadia and other drugs merchants trapped, in there hidden code it tracks everybody via IP and Telco-GEO-Locational navigation systems. These techs hook into all forms of social media and transfer there intelligence via the hidden 1024 block header byte part of and smtp email IP packet

We are all just pawns in their evil experiment

"THE BIG CASH OUT" as I like to call it is when the CIA will call in all the coins. WHy do u think they have a system that displays all transactions

Its Like OMG people ...So the idea the government shutting it down when it was started by the government !!!!

If some entity wanted to take over the bitcoin network, it wouldn't make any sense for them to kill it.

If bitcoin got to a point where it was really considered a threat, it would be trivial for a government or a bank to purchase enough mining resources to execute a 51% attack. Consider the "slap-on-the-wrist" fine of $1.9 BILLION that was recently given to HSBC for drug money laundering - an amount that they were clearing every 5 WEEKS. That should put things in perspective as to how simple it would be for any powerful entity to purchase a massive mining cluster and completely own the network. http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213

Once in control, they could easily mandate transaction fees as a "bitcoin tax". If I was a powerful government or bank I'd be very happy have a way to take a cut of all transactions, and I would expect that the majority of bitcoin users would have little choice but to begrudgingly go along with it. It would be everyone's best interest (financially) to do so because paying a tax to use bitcoin would be better than bitcoins becoming useless/worthless.

Net-net it wouldn't be that bad aside from crushing our egalitarian pipe-dreams.

1. Shut off the fiat currency to the exchangesHow valuable would BTC1 be if you couldn't sell it for euros, USD, or Yen? For an evil megabank, shutting them all down at the same time would be a breeze. The exchanges are a single point of failure and there aren't so many of them that you couldn't coordinate a raid on them all at once on some trumped-up charge like money laundering, drug trafficking, etc.

Even if the exchanges have a "whack-a-mole" strategy, by using the existing anti-fraud processes built into fiat, the evil megabank could easily find them and kill them.

2. Shut off the fiat currency to the manufacturersBy manufacturers I mean companies who make the stuff that makes bitcoin viable. For example, shut down all ASIC manufacturing, the big FPGA sites, the Casascius coins – anyone who helps bitcoin but takes payment in fiat is vulnerable to an attack the same way the exchanges are vulnerable.

3. Buy out or arrest silk road plus the top ten other bitcoin destinationsThe evil megabank doesn't have to kill every merchant who accepts bitcoin. If they took out the "top ten list," then bitcoin would be relatively worthless because the average person wouldn't be able to find anything they wanted to buy with it.

4. Astroturf up a stormBitcoin needs the goodwill of the internet and if it was already getting tons of bad press from the above attacks, it would be easy to piggy-back an astroturfing campaign on that to convince everyone "bitcoin is dead," "I lost all my money," "the feds raided my house and took all my computers," etc.

Oh yeah, and shut down the popular forums, like this one, by seizing the domain.